Understanding the Ordinals market: Focus on the Ordinals Wallet Marketplace
The leading marketplace by volume and users has issued its own collections – will this become standard industry practice?
Update (+1 hour): information was added on Pixel Mumus and the forthcoming Space Pepes game. Thanks to float on the “Pixel Pepe Farm” Discord server.
When considering where to buy, sell, or list a Bitcoin Ordinals Inscription or collection, it soon becomes apparent that Ordinals Wallet is the current leading marketplace by users, sales volume, and lately sales value too. From these metrics, and for another important reason described below, Ordinals Wallet could be characterized as the Binance of the Ordinals space. The following Dune dashboard represents this visually:
Ordinals wallet is a clear leader in terms of marketplace volume and transactions
Ordinals Wallet also has the most users (15,196 out of a total 27,129 tracked)
Marketplaces as Market Participants
In addition to an inscription service and a facility to purchase Bitcoin via MoonPay, the site features a popular web-wallet which allows users to transact BTC and, more importantly, store their inscribed sats in an Ordinals-aware wallet. While web-wallets are about the worst storage option from a security perspective, the Ordinals Wallet wallet (“OWW,” because that’s a pain to say) is nevertheless a very convenient option for Ordinals experimentation and the storage of low value assets.
It’s no wonder that Ordinals Wallet is a leading marketplace really, given the above features and its early entrance to this space. There’s one more key to the success of Ordinals Wallet however; it’s also the issuer of many popular collections which required an OWW or sign up to receive. These collections include:
- Planetary Ordinals (pre-sold by Ordinals Wallet and inscribed on the 4th of February)
- Animated Pordinals (airdropped to Planetary Ordinals holders on the 26th of February)
- Planetary Misprints (a giveaway to social media followers)
- Pixel Pepes (airdropped to anyone with an OWW containing at least one transaction on the 24th of February)
- Space Pepes (airdropped to OWW users on the 7th of April)
- Clay Pepes (a free mint into the OWWs of verified Pixel Pepe holders, which began on the 12th of April and ended recently)
- Pixel Mumus (the first Ordinals Wallet collection to be minted via their own service)
Its clear that Ordinals Wallets’ own collections formed a significant chunk of their trading volume. There are important synergies at play here, as trading fees are almost certainly the largest driver of profits for any marketplace / exchange. Let’s examine the numbers:
According to Dune, Ordinals Wallet did about $600,000 in total volume over the last week. Taking the average weekly Bitcoin price as $30,000 for simplicity’s sake, that equates to 20 BTC.
As per Best in Slot, Pixel Pepes alone did 6.66 BTC in volume over the last week. Planetary Ordinals did 1.17 BTC, Space Pepes did 0.893 BTC, Pixel Mumus did 0.448, and Planetary Misprints did 0.1 BTC. That’s a combined total of 9.271 BTC!
So, nearly half (46%) of Ordinals Wallet’s trading volume was composed of collections which they themselves issued!
Marketplace-Issued collections: the Exchange Tokens of the Ordinals space?
It’s not unreasonable to compare Ordinals Wallet’s Pixel Pepes to Binance’s BNB exchange token. While exchange tokens confer benefits like fee reductions to holders, it’s quite possible that Ordinals marketplaces will implement similar features for holders of their collections. More to the point, crypto exchanges were able to increase their profits and volumes through the issuance of such tokens, and the same surely applies for Ordinals marketplaces.
Like minting an exchange token, Pixel Pepes were created at minimal cost; the price of inscribing and creating simple pixel art for 1,563 pieces. As with BNB, Pixel Pepes went on to establish significant value in the market. Pixel Pepes even became the marketplace leader in terms of total volume traded, as well as volume for the last week.
Given that Ordinals Wallet has a market fee of 2.7%, they were able to generate an additional weekly income of 0.25 BTC purely from the trading in their own collections.
Implications for Ordinals Marketplaces
Self-issued collections are clearly an advantage for any Ordinals marketplace. Not only do they provide a strong incentive for users to sign up but, if popular, they greatly boost profits too. Marketplaces are ideally-positioned to both know their users’ preferences and to advertise to them, so marketplace-collections have relatively high odds of success. As for incentivizing sign-ups, more users equals more trading (plus more inscribing and more Bitcoin purchases, in the case of Ordinals Wallet), which is key to the profitability of any marketplace. Ordinals Wallet is even working on a web3 game which will integrate Space Pepes so as to increase user engagement.
Of course, self-issuance is not the only path to profitability. By locking in exclusive listings of popular collections, marketplaces can also ensure high trading volumes. Thus, some combination of self-issuance and exclusive deals with creators will likely be the standard for Ordinals marketplaces going forward.
Unlike crypto exchanges, which facilitate the trading of identical products and must therefore compete primarily on fees, security, and features, Ordinals marketplaces can offer exclusive products in high demand. Indeed, competition between marketplaces will promote such content exclusivity. From the user perspective, it would be ideal to be able to trade all collections on a single marketplace, but for marketplaces that would be the worst case scenario. Without product exclusivity, they’d have to compete first and foremost on fees, which would exert downward pressure on their primary source of profit.
Conclusion and Prediction
These circumstances are likely to ensure that the current fragmentation of trading between various marketplaces will persist indefinitely, unless a single dominant player absorbs the overwhelming majority of trading, making it uneconomic to list collections elsewhere. One interesting possibility is that market aggregator sites, such as Best in Slot and WizOrd, will introduce trading across marketplaces, perhaps at a standardized fee.
Full Disclosure: the author has an inscription listed for sale on the marketplace concerned.